The Importance of a Power of Attorney
March 7, 2022
In a last will and testament, you can designate how your assets will be distributed to your heirs and loved ones when you’re gone, but what happens if you suddenly become unable to manage your own financial affairs due to incapacitation or some other reason? A will does not cover events while you’re still alive.
Most people assume that a spouse or adult family member can just step in and take care of your finances and asset management, but this is not so. For someone to take over your financial affairs, they would have to get a court to rule that you’re legally incompetent.
To prepare for the possibility that you may need someone to manage your affairs for you someday, you can execute a legal document known as a power of attorney (POA). Though the word “attorney” is used in the title of the document, it signifies the power the person will assume when the POA takes effect. The person you name – whether a family member or close friend – will become your agent or attorney-in-fact.
Having a power of attorney in place is part of comprehensive estate planning. You should not only plan for the care of your loved ones when you’re gone, but you should also have the necessary legal instruments in place to take care of financial matters while you’re still alive but unable to do so yourself.
If you’re in or around Dayton, Ohio, contact StachlerHarmon Attorneys at Law for your estate planning needs. Whether you’re just beginning the process or already have documents in place, we will review your situation with you and advise you of the best path forward. If your current documents need updating, we can help with that, too. As life situations change, so too should estate planning documents change to reflect any new realities.
At StachlerHarmon Attorneys at Law, we also proudly serve clients in Dayton, Centerville, Miamisburg, and throughout the counties of Warren, Greene, Clark and Butler,
What Is a Power of Attorney?
A power of attorney is a legal document that enables someone else to manage your financial affairs and assets, wholly or in part, immediately upon execution of the document or only when a certain event or condition is met. Issuing a POA does not mean turning over sole control to someone else. While you’re alive and physically able to, you can still manage your own finances.
The agent, or attorney-in-fact, who you name in your POA can be a family member, friend, or associate, but it should be someone you trust implicitly. You can also name a successor agent who will take over if the primary agent is unable or unwilling to take on the task.
If you’re a perfectly healthy 35-year-old, you may balk at the idea of giving someone else equal power over your finances. After all, unless you restrict the authority your attorney-in-fact has, that person can sign checks, take out loans, and complete other financial transactions just like you. Of course, that’s why you should pick someone you totally trust, but you don’t need to cede that power immediately upon issuance of the POA. Instead, you can make it “springing.”
Springing means that the powers granted in the POA take effect only if some event occurs like your incapacitation or perhaps your deployment overseas on a military call-up. Then, the POA “springs” into action. You also can limit the scope and time frame of a power of attorney.
Three Types of Powers of Attorney
Generally speaking, there are three types of POAs: durable, general, and limited. Here’s how they differ:
DURABLE OR STATUTORY POA: This document gives full power to the named agent to manage your financial affairs. Durable refers to the fact that it stays in effect even if you become disabled. Remember also, however, that any POA can be made springing.
GENERAL OR FINANCIAL POA: Similar to a durable POA, the agent is given broad powers over your financial affairs, the difference being that those powers expire should you become incapacitated.
LIMITED POA: This POA can restrict the powers awarded to the agent. For instance, you may just want the agent to manage your rental properties while you’re out of the country on extended business or vacation, or you may just want the agent to pay your bills while you’re gone. In addition to restricting powers awarded, a limited POA can establish time parameters. For instance, you can designate that the award of powers will be available only from a starting date to an ending date.
A power of attorney can be revoked at any time that you choose so long as you still possess all your faculties. You cannot revoke a POA if you’re incapacitated. Also, POAs automatically expire when you pass on. Your agent has no power to tamper with your will or trust.
Medical Power of Attorney
Another type of POA involves healthcare decisions. The above three types of POAs do not extend to the hospital room, only to the paying of medical bills. If you wish to have someone voice your medical treatment options should you become incapacitated, then you must create what is called a healthcare power of attorney.
The person named in this type of POA is empowered to express your wishes if you’re incapacitated in a hospital. For instance, you can choose “do not resuscitate” or “do not put me on life-support,” though you could also opt-in for those medical interventions. Other options include palliative care and even organ donation.
Power of Attorney Lawyers Serving Dayton, Ohio
A power of attorney, or even a combination of powers of attorney, should be considered in any estate plan. Comprehensive estate planning takes into consideration not only the welfare of your loved ones, but also your own financial and medical needs should you become incapacitated or otherwise unable to carry out your own financial responsibilities or speak for yourself.
If you’re in the Dayton, Ohio, area, or in the surrounding communities of Centerville, Miamisburg, Greene County, Clark County, Butler Country, or Preble County, contact the estate planning team at StachlerHarmon Attorneys at Law. We will review your needs and your situation with you and help you create the legal instruments that can provide peace of mind for both your family and yourself.